{ "id": 251706, "name": "GENERAL INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee and Counterdefendant-Appellee, v. ROBERT B. McMANUS, INC., Defendant-Appellant (Art's Transportation, Inc., et al., Intervenors and Counterplaintiffs-Appellants)", "name_abbreviation": "General Insurance Co. of America v. Robert B. McManus, Inc.", "decision_date": "1995-05-01", "docket_number": "Nos. 1\u201493\u20143310, 1\u201493\u20143386 cons", "first_page": "510", "last_page": "516", "citations": [ { "type": "official", "cite": "272 Ill. App. 3d 510" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "452 N.E.2d 73", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "116 Ill. App. 3d 352", "category": "reporters:state", "reporter": "Ill. 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App. 3d", "case_ids": [ 3560295 ], "year": 1992, "pin_cites": [ { "page": "228" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/121/0224-01" ] }, { "cite": "495 A.2d 406", "category": "reporters:state_regional", "reporter": "A.2d", "opinion_index": 0 }, { "cite": "100 N.J. 325", "category": "reporters:state", "reporter": "N.J.", "case_ids": [ 1360950 ], "opinion_index": 0, "case_paths": [ "/nj/100/0325-01" ] }, { "cite": "617 N.E.2d 514", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "247 Ill. App. 3d 768", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2928129 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/247/0768-01" ] }, { "cite": "608 N.E.2d 155", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "240 Ill. App. 3d 598", "category": "reporters:state", "reporter": "Ill. 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App. 3d", "case_ids": [ 3032419 ], "pin_cites": [ { "page": "991" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/106/0988-01" ] }, { "cite": "429 N.E.2d 1203", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "88 Ill. 2d 1", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3083008 ], "pin_cites": [ { "page": "5" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/88/0001-01" ] }, { "cite": "319 N.E.2d 491", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "59 Ill. 2d 165", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2957997 ], "opinion_index": 0, "case_paths": [ "/ill-2d/59/0165-01" ] }, { "cite": "401 N.E.2d 539", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "78 Ill. 2d 420", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3075623 ], "opinion_index": 0, "case_paths": [ "/ill-2d/78/0420-01" ] }, { "cite": "400 N.E.2d 921", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1980, "opinion_index": 0 }, { "cite": "78 Ill. 2d 376", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3074014 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/ill-2d/78/0376-01" ] }, { "cite": "294 N.E.2d 7", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 3, "opinion_index": 0 }, { "cite": "10 Ill. App. 3d 115", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5393223 ], "weight": 3, "pin_cites": [ { "page": "121" }, { "page": "125" }, { "page": "121" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/10/0115-01" ] } ], "analysis": { "cardinality": 647, "char_count": 11925, "ocr_confidence": 0.783, "pagerank": { "raw": 2.7676479573633927e-07, "percentile": 0.8340727586820699 }, "sha256": "428f041d7af902724c132da60f8fb5558cd3eabdcb1a5522ea905b5ead93c671", "simhash": "1:09f8931abb2e84ec", "word_count": 1953 }, "last_updated": "2023-07-14T18:46:33.224419+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "GENERAL INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee and Counterdefendant-Appellee, v. ROBERT B. McMANUS, INC., Defendant-Appellant (Art\u2019s Transportation, Inc., et al., Intervenors and Counterplaintiffs-Appellants)." ], "opinions": [ { "text": "JUSTICE WOLFSON\ndelivered the opinion of the court:\nThis case requires us to determine the event that triggered an errors and omissions insurance policy.\nThe controversy took root when a broker, Robert B. McManus, Inc. (McManus), obtained liability coverage for Art\u2019s Transportation, Inc., Windy City Coaches, and Art\u2019s Special Services, Inc. (Art\u2019s), with Savoy Reinsurance Company Limited (Savoy). The effective policy period was December 31,1987, to December 31, 1988. Everyone agrees that Savoy was not licensed to do business in Illinois at the time the policy was obtained.\nAfter the Savoy policy was issued, claims occurred. There were lawsuits. Savoy began defending those lawsuits. In May 1991, after more than two years of defending Art\u2019s, Savoy\u2019s lawyers withdrew from the claims and lawsuits because the insurance company was not paying legal fees. That required Art\u2019s to hire its own lawyer and settle and litigate the pending claims and lawsuits at its own expense.\nIn June 1991 Art\u2019s made a claim against McManus under the broker\u2019s errors and omissions policy. The claim was based on a provision of the Illinois Insurance Code. That section, now section 121 \u2014 4 (215 ILCS 5/121 \u2014 4 (West 1992)), concerns unauthorized insurance companies and provides, in part:\n\"If any such unauthorized insurer fails to pay any claim or loss within the provisions of such an insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract shall be liable to the insured for the full amount of the claim or loss as provided in the insurance contract.\u201d\nClearly, McManus would be liable to Art\u2019s for the claims or loss that would have been covered by the Savoy policy. That is not the issue before us. The issue is whether McManus\u2019 errors and omissions policy written by General Insurance Company of America (General) covers the claims or loss that would have been covered by the Savoy policy.\nGeneral\u2019s errors and omissions policy was effective from April 4, 1991, to April 4, 1992. It contained a prior acts exclusion, set forth in an endorsement, which provided:\n\"It is hereby understood and agreed that coverage shall not apply to claims or suits arising as a result of acts, errors, or omissions which occurred prior to April 4, 1990.\u201d\nThe question, then, is: When did the \"act, error, or omission\u201d by McManus take place for the purpose of coverage?\nIf it took place just before December 31, 1987, when the Savoy policy went into effect, there would be no claim under the errors and omissions policy.\nIf it took place in May 1991, when Savoy\u2019s lawyer withdrew, leaving Art\u2019s high and dry, the June 1991 claim would trigger coverage. (General does not contend there was any defect in the way it was notified about Art\u2019s claim against McManus.)\nThe case is before us on General\u2019s action for declaratory judgment. General sued McManus, seeking a declaration that McManus was not covered by the errors and omissions policy. Art\u2019s intervened, filing a countercomplaint for declaratory judgment.\nThe trial court granted General\u2019s motion for judgment on the pleadings, dismissed Art\u2019s countercomplaint, and denied motions for reconsideration. This appeal followed.\nWe affirm the trial court.\nDECISION\nArt\u2019s contends the event that activated McManus\u2019 coverage with General was the nondefense by Savoy in May 1991. Before that, says Art\u2019s, there could be no claim because Savoy was defending it against claims and lawsuits. Until May 1991, McManus\u2019 placement of coverage with an unauthorized insurer was not an event that would trigger coverage. Art\u2019s contends the prior acts exclusion is ambiguous and must be construed in favor of the insured. Any other construction, says Art\u2019s, would so narrow the coverage of the errors and omissions policy as to be against public policy.\nGeneral contends, and the trial court agreed, that the prior acts exclusion is clear and unambiguous. It means what it says. McManus violated the Insurance Code when he obtained insurance from Savoy, an unauthorized insurance company. That, says General, is the \"act, error, or omission\u201d covered by the errors and omissions policy. It follows, contends General, that Art\u2019s claim was excluded by the policy.\nTo guide us in our decision, we visit some of the general rules of insurance contract construction.\nInsurance policies are contracts. Policies should be construed as other contracts are construed. Hartford Accident & Indemnity Co. v. Case Foundation Co. (1973), 10 Ill. App. 3d 115, 121, 294 N.E.2d 7.\nIf a provision of an insurance policy can reasonably be said to be ambiguous, it will be construed in favor of the insured. (Dora Township v. Indiana Insurance Co. (1980), 78 Ill. 2d 376, 400 N.E.2d 921.) If the provisions of the policy are clear and unambiguous, there will be no need for construction and the provisions will be applied as written. Menke v. Country Mutual Insurance Co. (1980), 78 Ill. 2d 420, 401 N.E.2d 539.\nAll the provisions of the insurance contract, not just an isolated part, should be read together to interpret it and to determine whether an ambiguity exists. Weiss v. Bituminous Casualty Corp. (1974), 59 Ill. 2d 165, 319 N.E.2d 491.\nIn applying the rules of interpretation, words in the policy should be given their plain and ordinary meaning, and the court should not search for an ambiguity where there is none. United States Fire Insurance Co. v. Schnackenberg (1981), 88 Ill. 2d 1, 5, 429 N.E.2d 1203.\nA contract is not rendered ambiguous simply because the parties do not agree on its meaning. Joseph v. Lake Michigan Mortgage Co. (1982), 106 Ill. App. 3d 988, 991, 436 N.E.2d 663.\nThe rules of construction do not require courts to reach strained or unreasonable interpretations which would have the effect of invalidating the contract between the parties. JG Industries, Inc. v. National Union Fire Insurance Co. (1991), 218 Ill. App. 3d 1061, 1066, 578 N.E.2d 1260.\nWith these principles in mind, we turn to the words of this insurance contract.\nGeneral\u2019s policy closely resembles a claims made policy. The major difference between a claims made policy and an occurrence policy is in the risk insured. In the occurrence policy, the risk is the occurrence itself. In the claims made policy, the risk insured is the claim brought by a third party against the insured. Central Illinois Public Service Co. v. American Empire Surplus Lines Insurance Co. (1994), 267 Ill. App. 3d 1043, 1048, 642 N.E.2d 723.\nOne of the purposes of a claims made policy is to allow the insurance company to easily identify its risk, allowing it to know in advance the extent of its claims exposure and thus compute its premiums with greater certainty. See Central Illinois Public Service Co., 267 Ill. App. 3d at 1049.\nGeneral and McManus bargained for a claims made policy that contained an additional limitation \u2014 the prior acts exclusion. When an exclusion clause is relied on to deny coverage, its applicability must be clear and free from doubt. (Gibraltar Casualty Co. v. Sargent & Lundy (1991), 214 Ill. App. 3d 768, 574 N.E.2d 664.) An exclusion in an insurance policy serves the purpose of taking out persons or events otherwise included within the defined scope of coverage. Hartford Accident & Indemnity Co. v. Case Foundation Co. (1973), 10 Ill. App. 3d 115, 125, 294 N.E.2d 7.\nWhen the parties place a valid limitation on the coverage in the insurance policy, the plain language of that limitation must be effectuated. (Gray v. Great Central Insurance Co. (1972), 4 Ill. App. 3d 1084, 1086, 283 N.E.2d 261.) Our courts will enforce clearly drawn exclusions. Central Illinois Public Service Co. v. Allianz Underwriters Insurance Co. (1992), 240 Ill. App. 3d 598, 608 N.E.2d 155.\nThe policy in this case was freely entered into by General and McManus. Art\u2019s can stake no broader claim. It is true that the prior acts exclusion smacks of occurrence coverage, but that is what the parties to the contract intended. The language of the exclusion is clear and precise. It did not affect the time for the making of claims under the policy. Rather, the exclusion narrowed the arena for Mc-Manus\u2019 \"act, error, or omission\u201d that might give rise to a claim.\nWe find nothing ambiguous in the prior acts exclusion. If we accept Art\u2019s view that it must apply to the time when Savoy\u2019s lawyer withdrew, we would be reading the exclusion out of existence. We will not do that.\nIt would distort language and logic to hold that McManus\u2019 \"act, error, or omission\u201d took place in 1991. It clearly did not. It happened when he placed Art\u2019s with an unauthorized insurer. That was a serious violation of the Insurance Code, justifying harsh administrative penalties. See Cherington v. Selcke (1993), 247 Ill. App. 3d 768, 617 N.E.2d 514.\nWe find nothing in the Insurance Code that would require a different reading of the prior acts exclusion. Nor do we believe the narrowed coverage that resulted from the exclusion violates any notion of public policy.\nThe New Jersey case relied on by Art\u2019s, Sparks v. St. Paul Insurance Co. (1985), 100 N.J. 325, 495 A.2d 406, reflected an objective \"reasonable expectations\u201d test that has been rejected by the courts of this State. (See Insurance Co. of North America v. Adkisson (1984), 121 Ill. App. 3d 224, 228, 459 N.E.2d 310.) In addition, the policy in Sparks was confined to acts of negligence taking place during the policy year. Sparks represents \"very much a minority view.\u201d Truck Insurance Exchange v. Ashland Oil, Inc. (7th Cir. 1992), 951 F.2d 787, 791.\nIf McManus wanted protection against old occurrences, it could have obtained occurrence coverage. The claims made policy, with its short window of retroactivity, is intended to limit the temporal universe of fault. That is what McManus bought and that is what it must live with. So must Art\u2019s.\nNothing in Russ-Field Corp. v. Underwriters at Lloyds (1958), 164 Cal. App. 2d 83, 330 P.2d 432, cited by Art\u2019s, affects our conclusion. The policy in that case did not contain a prior acts exclusion that was anywhere near the exclusion in this case. When a policy contains an explicit limitation on coverage, as does the policy in this case, \"this language must be effectuated.\u201d Stiefel v. Illinois Union Insurance Co. (1983), 116 Ill. App. 3d 352, 355, 452 N.E.2d 73.\nThere are no questions of fact reflected by the pleadings in this case. The trial judge properly proceeded to construe the policy and determine which party was entitled to judgment on the pleadings. (See Hartford Accident & Indemnity Co. v. Case Foundation Co. (1973), 10 Ill. App. 3d 115, 121, 294 N.E.2d 7.) We agree that General was entitled to judgment against McManus as a matter of law. Art\u2019s countercomplaint was properly dismissed.\nCONCLUSION\nWe affirm the trial court\u2019s judgment on the pleadings in favor of General Insurance Company of America and against Robert B. Mc-Manus, Inc. We also affirm the trial court\u2019s dismissal of the counter-complaint filed by Art\u2019s Transportation, Inc., Windy City Coaches, and Art\u2019s Special Services, Inc.\nJudgment affirmed.\nCAMPBELL, P.J., and BUCKLEY, J., concur.\nArt\u2019s is a claimant against McManus in another lawsuit, asserting the statutory liability of McManus for placement of insurance with an unauthorized company. McManus tendered the defense of that action to General.", "type": "majority", "author": "JUSTICE WOLFSON" } ], "attorneys": [ "Allen H. Meyer and Glenn A. Schwartz, both of Chicago, for appellants Art\u2019s Transportation, Inc., Windy City Coaches, and Art\u2019s Special Services, Inc.", "Pretzel & Stouffer, Chartered, of Chicago (Robert Marc Chemers and Anne Scheitlin Johnson, of counsel), for appellee." ], "corrections": "", "head_matter": "GENERAL INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee and Counterdefendant-Appellee, v. ROBERT B. McMANUS, INC., Defendant-Appellant (Art\u2019s Transportation, Inc., et al., Intervenors and Counterplaintiffs-Appellants).\nFirst District (1st Division)\nNos. 1 \u2014 93\u20143310, 1 \u2014 93\u20143386 cons.\nOpinion filed May 1, 1995.\nAllen H. Meyer and Glenn A. Schwartz, both of Chicago, for appellants Art\u2019s Transportation, Inc., Windy City Coaches, and Art\u2019s Special Services, Inc.\nPretzel & Stouffer, Chartered, of Chicago (Robert Marc Chemers and Anne Scheitlin Johnson, of counsel), for appellee." }, "file_name": "0510-01", "first_page_order": 528, "last_page_order": 534 }